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The president of content at Discovery Networks International tells Tim Dams about the ‘creator led’ shows she’s looking for

Within a few minutes of walking into Marjorie Kaplan’s office, she is showing a promo in which lots of couples strip off and jump into bed. It’s an unexpected start to any interview, let alone at broadcaster like Discovery with its roots as a science and natural history specialist.

Yet for Kaplan, the show – dating series Undressed – sends a strong signal about the kinds of programmes she is looking to commission in her role as president of content at Discovery Networks International. “It breaks the mould a little bit about what people think Discovery is,” she says.

Undressed is produced by RDF-owned Fizz for Discovery’s TLC, and is based on an Italian format that first played on one of Discovery’s Italian channels. Local versions are also being produced in countries including the Netherlands, Poland and Australia.

Part of Kaplan’s brief at DNI is to dig out promising Discovery shows from across the 220 countries in which it operates, and to take them around the world. “Finding local sparks and blowing on them,” is how she characterizes the role.

The other part is to commission big, standout shows that can play all over the world on DNI’s channels, including Discovery Channel, TLC, Animal Planet and ID: Investigation Discovery. But big doesn’t necessarily mean expensive, she says. “Big expensive is fine, but money doesn’t always mean things are big ideas. I want to find exciting, bold and brave content.”

Kaplan stresses that DNI channels already have a ‘fantastic pipeline’ of 1,800 hours of shows from the US, so she is not looking for content to fill specific slots or for particular genres. “We are the stretch,” says, adding that she is looking for “creator led content – surprising, interesting ideas for our audience.”

Expanding on the theme, she says that competition is fiercer than ever given the growth of catch up services and digital platforms. “We are not just competing with what is on television tonight. We are competing with everything that has ever been on television.” That means the creative bar has to be set higher by broadcasters like Discovery. “More than ever, it is so important for content to move from being liked to being loved. We are only interested in content that we believe can be loved.”

She thinks Undressed has the potential to be loved. A fixed rig show that attempts to find out if two people can fall in love after undressing each other, she describes it as a ‘noisy’ social experiment.

She also picks out Everest Rescue, a Betty production about high altitude helicopter rescues on the world’s talent mountain. Everest Rescue has been commissioned to play to global audiences and, says Kaplan, is more than just a typical ‘dangerous jobs’ show. In a pitch tape for series, a pilot is asked what it is like to save a life and he wells up in tears. “That was the moment I knew we can definitely do this show,” says Kaplan, explaining that she wanted characters with emotional range rather simply hard-driving, stoic types who just get on with the job.

Kaplan says she doesn’t just want to commission shows that look and sound like successes that Discovery has had in the past; she stresses the need for range, subtlety and the unexpected. The first rescue by one of the pilots in the show – which took place at an altitude that is incredibly dangerous for a helicopter to fly at – was for a rich climber who didn’t want to walk down the mountain. “That is part of what it means now to be at Everest, and I want those stories,” says Kaplan.

As yet, however, it’s unclear exactly how much Kaplan intends to commission at DNI. She started in October, and Undressed and Everest Rescue are the only two shows to be announced. She points out that she has spent time visiting Discovery’s international teams, meeting producers and putting ideas into development. “We cut way back this year, because we wanted to take a breath and say, ‘What should we really do?’”

Among some producers, there’s a feeling that Discovery has scaled back commissioning as it focuses on its Eurosport platform, particularly since acquiring the European rights to the Olympic Games between 2018-2024 for $1.44bn. “That is not true,” says Kaplan. “There is no question that getting the Olympics was a big swing and a big financial commitment. But that has not had an impact on the money we intend to spend on content internationally.”

She also says that DNI is open to business to all indies, even though Discovery now owns a range of UK production companies following its acquisition of the All3Media stable as well as Raw and Betty.

“We expect a lot to come from them and to come from the rest of the creative community. We don’t have a policy of saying that we only work with companies that we own or partially own.” Discovery, she adds, works with over 70 indies in the UK. “We want to be the people that people want to work for and with,” she concludes. “It has to be about being the best creative partners.”

CV
Based in London, Marjorie Kaplan has been president of content for Discovery Networks since October 2015.

Kaplan has spent nearly 20 years at Discovery, where she was most recently group president for TLC, Animal Planet and Velocity.

She made her name running Animal Planet from 2007, repositioning the network as a more adult focused entertainment brand.
Kaplan joined Discovery in 1997 as senior vice president for children’s programming and products.

There’s plenty to consider when it’s time to invest in expensive new kit, beyond whether it is has the right specifications for the job. For many, a key priority will not just be the quality of a camera or the versatility of an editing system, but how best to finance the purchase.

If you are fortunate enough to have a reasonably healthy bank balance, it might seem obvious to go ahead and purchase new kit upfront. But it is not necessarily the case. Buying outright is a good option if you have the capital available, or if it is essential that you own the equipment.

But other options, such as lease purchase (HP) or finance leasing, see a finance company buy the kit for your business to use in return for regular payments over a fixed period. These smaller payments will leave you with cash in the bank, but because you pay interest on the instalments, you will pay more for the goods in the long run.

For example, Clockwork has, so far this year, funded projects including equipment and vehicles for a large-scale production in the Highlands; an IT refresh for a creative technology studio; a refurbishment loan for a facility move; camera bodies and lenses for a rental company; and cash flow finance for a company with a short term hiatus.

Medialease, meanwhile, has traditionally funded the post production business and some of the larger and mid-sized OB and TV/ Film production companies. It has also become more involved in the audio visual installation market, and the equipment intensive end of the live market for West End theatre shows, festival and music concerts.

Finance companies argue that it often makes sense to use lease purchase or finance leasing for kit, spreading payments to ease cash flow. The cash buffer in the bank could help your company if it ventures into choppy waters down the line.

Freeing up working capital also allows companies to invest in their businesses more effectively, particularly on development and new opportunities.

Geradine Scher, managing director of Clockwork Capital, says: “The maxim “cash is king” can refer to the balance sheet or cash flow of a business and having cash on hand is normally a positive sign, with a strong cash flow allowing a company more flexibility in regards to making business decisions and potential investments, such as key hires or even acquisitions, as well as being able to cover operational costs over a period of time, to hedge against any downturn in business. By hanging on to cash and utilising leasing when purchasing large value capital items you get immediate access to the equipment you need while easing cashflow and taking advantage of available tax benefits.”

Paul Robson, managing director of Medialease, adds: “It’s a question of cash flow and best use of it. Many customers we deal with have excellent cash flow and particularly good monies on deposit, but they might not wish to tie up that cash on buying assets that could easily be financed (at currently still very good interest rates generally). This enables them freedom to conserve cash reserves for potential other non-asset based requirements – expansion of premises, new premises investment / warehouse alterations, or simply in reserve for future tax payments or purchase of another company.”

From a management perspective, leasing simplifies budgeting because it offers a set payment every month. Monthly payments are fixed throughout the term regardless of what happens to interest rates or inflation. Leasing also allows you have access to the latest equipment or technology, which is particularly useful when technology is changing so fast.

If you decide to go down this route, there are multiple options available from finance companies. The two most common in the production sector are lease purchase (HP) and finance lease.

Lease purchase involves paying for the equipment in instalments over an agreed term after which the item is yours. A finance lease gives you the option to either return the equipment at the end of the lease period, continue renting it at a further reduced cost or selling the equipment on behalf of the financier whereby you retain a pre-agreed percentage of the sale proceeds.

There are a number of additional leasing options too, including an operating lease, where you lease the equipment for as long as you need it rather than a fixed period. The ownership then returns to the leasing company. Furthermore, there’s a contract lease option, which is similar to the operating lease but also includes maintenance cover.

Which of the above options you choose depends on whether you want to own the product at the end of the lease agreement. Different types of contracts also have different accounting, tax and VAT implications – which would be worth discussing in more detail with your accountant before proceeding.

Scher comments: “Finance leases enable the VAT element to be cashflowed along with the rentals on a monthly basis. Some of our technology funders are now favouring operating leases once again, which can provide significant cashflow and tax advantages to lessees, particularly if they want to refresh their equipment on a regular basis.”

In return for their investment, finance companies will want to see as much financial information as possible, plus clear evidence of the business rationale for your investment. Says Clockwork’s Scher: “Every deal is different and Clockwork has no hard and fast criteria because as a niche funder as well as broker to mainstream funders we are always prepared to look outside of the box to find a way of helping clients, but it is important to us that we meet with clients face to face. We work with start-ups, early stage and long-established businesses, finding them the best funding options to meet their specific needs.”

Medialease’s Robson adds: “As an intermediary and not the primary lender, we take all sorts – from new start companies to major PLC and VC backed companies. We fund the widest spectrum as we are not restricted to one bank / one decision maker.“

A specialist financier who knows the industry can make the documentation process run a lot more smoothly than approaching a bank direct, as well as providing advice about the best options to take.

Robson says: “On a larger deal, over say £200k, we know we can compete with the client’s bank and often provide a quicker and easier service for the same rates, if not slightly more competitive on the right terms and equipment. However for the much smaller companies and new start companies we will structure the deal to suit the customer – so if there is little or no deposit available or perhaps they are looking at a relatively large investment for the size of the company or size of their balance sheet, we can structure a deal that a traditional lender just can’t get to.”

Interest rates can vary from a few percentage points above the Bank of England’s base rate through to the mid-teens. The size of a deposit will also vary, ranging from 0% to 30%, and often depends on the perceived risk profile of your business to the lender.

Says Robson: “We have large post production and OB clients, turning over in excess of £10m per annum who we are providing funding to at under 2.5% flat rate and others at over 8% flat (equivalent to a spread of 4.5% to 17% across the spectrum of clients on an inherent % rate basis). It all depends on the strength and weaknesses of a customer, the size of the opportunity and the specific assets they are looking for us to buy.”

LEASING CASE STUDIES

John Rogerson, CEO
Halo Post

What were you looking to invest in? “Halo have done a great deal of spending over the past 12-18 months. The sharp rise in demand for UHD/4K delivery has necessitated a significant infrastructure upgrade. We always buy the best we can afford, it simply makes good sense - but it can be expensive. We’ve added a VFX department, a VR team, another 5.1 audio suite (our 8th), several online suites, a further grading suite… and another new building, our 4K finishing hub. So it was an expensive period.”

Why did you choose to lease rather than buy? “The reason for leasing as opposed to buying is simple. It spreads the cost of big ticket items over a number of years and makes it possible to buy the things you need, when you need them. Our reputation is built on being technically ahead of the game and creatively first-class so we don’t take chances on our infrastructure.”

Which company arranged the lease? ”Geraldine Scher at Clockwork Capital. We came across Geraldine in 2009 and have since become good friends. Geraldine played a big part in Halo’s success by taking a chance on us when we were smaller. We’ve stuck together ever since.”

Mike Georgiou, CFO
Goldcrest

What were you looking to invest in? “In 2013 we began an investment and recruitment program to increase the number of services that we offer to drama and feature clients and transform the UK post production business into the UK’s leading one-stop-shop for audio and digital intermediate services. In May we opened Theatre 1, central London’s largest sound mixing theatre.”

Why did you choose to lease rather than buy? “Leasing is a much better use of the company’s working capital, especially given the scale of what we set out to do. Although there is an increase in the overall cost of the equipment, leasing allows us to spread the cost of that equipment over the time that it is used.”

Which company helped to arrange the lease? “Medialease. Paul, Simon, Ali and Kelly are a fantastic team to work and have been a great help to us over the years.”

Jon Howarth, Director
Shoot Blue

What were you looking to invest in? “A set of Cooke Anamorphic /i lenses which cost approximately £100k.”

Why did you choose to lease rather than buy? ”With the level of investment combined with the long life expectancy of these lenses, it makes sense to spread the cost of the investment over a long period to maintain our cash flow for other expenditure.”

Which company helped to arrange the lease? ”Azule Finance. We have worked with Azule for many years. They have a great understanding of the equipment and the industry.”

Helen Cardrick
CCO, Procam group

What were you looking to invest in? “Our recent assets purchase of the camera side of Take 2.”

Why did you choose to lease rather than buy? ”Due to the significant financial commitment, we chose to lease – and negotiating a three year term lease also provides us with good visibility of future cash flows.”

Which company helped to arrange the lease? ”Paragon Bank Technology Finance because of their excellent customer service, in-depth industry knowledge and ability to access particularly competitive rates.”

The lack of studio space for film and TV has been a big issue for producers for a few years now.

The on-going boom in TV drama, aided by the introduction of the high-end drama tax break, has left many shows scouring far and wide for suitable spaces to film.

A continual flow of Hollywood films into the UK – like Star Wars: Episode VIII and Fantastic Beasts and Where to Find Them – has also driven up demand for studio space.

At the same time, the London area in particular has seen a steady decline in the availability of studio space. The BBC’s Television Centre and Riverside Studios are both closed for refurbishment. Others have closed altogether, most notably Teddington Studios, which was sold to a property developer. Fountain Studios, home to The X Factor, is set to close at the end of December – after a £16m sale to a property developer.

This squeeze in supply has only heightened demand for what space is left. “Stage space is at a premium,” confirms Twickenham Studios chief operating officer Maria Walker.

The Space Project concurs: “Drama and TV production in the UK is thriving…We are already taking bookings for 2018,” says general manager Colin Johnson. Pinewood describes the past year as “buoyant”. Sales director Mark Hackett says the UK is now a world leader in providing facilities and crews to the production of film, TV and games “and this shows in our high levels of occupancy.”

For many studios, this heightened level of demand has led to its own set of challenges – how to fit the work in. “While the lack of studio space across the UK, and particularly in London, is a challenge for the industry, it is an opportunity for us,” says 3 Mills Studios head of studios Tom Avison. Dock 10’s head of commercial Patrick Steel adds: “The hardest game of Tetris you’ve ever played doesn’t compare to the challenges in getting the best fit of large productions in the autumn.”

Bristol’s The Bottle Yard, for example, has hosted four big shows – at the same time: Galavant, Poldark, The Living and the Dead and Trollied.

The London Studios, says ITV Studios md of resources, Paul Bennett, remains extremely busy. “Some of our bookings extend way beyond the next 12 months.” Bennett is quick to add, however: “We might be able to do you a deal in August if you get in quick.”

However, business remains challenging for many studios – particularly for fully equipped TV studios. Budgets are under pressure for many shiny floor shows, with productions shopping round in an effort to spend less on studio hire. There has also been huge change at senior commissioner level at the BBC and ITV, meaning that decision making is delayed – leading to uncertainty or late cancellations for studios.

Many studios point to the challenge of booking in the right kind of shows to make good business sense. BBC Studioworks head of studios and post production services John O’Callaghan says: “For us, the key is having a balance of long-term shows which can be in the studios for 20 weeks producing four shows a day and also weekly, fast turnaround topical shows.”

The London Studios’ Paul Bennett adds that studios have to work faster to turn projects around: “Broadcasters’ budgets are ever more challenging and so production companies are always looking for best value – our ability to turn shows around extremely quickly maximises their ‘on-camera’ time...We can even use a single studio for three different live productions, with three different sets, in a single day.”

Many more studios are set to open in the next year or two, alleviating the problems facing producers – but adding to the competition for existing providers. This month, Pinewood opens five new large sound stages and additional facilities as part of an expansion plan approved back in 2014.

Three studios are set to reopen at the BBC former Television Centre HQ in spring 2017, with bookings being taken later this year.

The Space Project is also set to double in size, having won a £14m investment package.

Warner Bros-owned Leavesden Studios, meanwhile, plans to extend facilities at the 200 acre site by a quarter.

North London’s Elstree Studio complex is also expanding, building more stages and technical facilities.

Belfast’s Titantic Quarter, home to Game of Thrones, is investing £14m to develop two more film studios. A new £10m studio complex to rival Titanic is also in the works at North Foreshore Film Studios, an ex- landfill site at Belfast Harbour.

Screen Yorkshire is converting a former RAF base into a studio facility, and has already enticed ITV drama Victoria to shoot there.

Pending council approval, Liverpool could also be opening its first film studio. The £25m scheme is on the 4.5 acre site of a former Littlewoods warehouse.

Scotland, long without a significant studio space, could finally be about to have its own studios, with plans afoot to develop Wardpark Studios in Cumbernauld and Pentland Studios outside Edinburgh.

This rush to build studios has sparked concern about whether the expansion is sustainable over the long term. Says Pinewood’s Mark Hackett: “We all know how fast things can change so no-one is resting on their laurels…we are always striving to improve and develop new ways to support the creative industries achieve their ambitions.”